Competence Perspective on Managing Internal Process: Volume 7

In their paper “Fractals, stories, and the development of coherence in strategic logic,” Janice Black, Frances Fabian, and Kim Hinrichs explore key communication dynamics that drive the emergence of a coherent strategic logic in an organization. Using a longitudinal study of a non-profit organization in the health and caring industry, the authors use “fractals” as a metaphor for organizational processes that help to crystallize a clear, coherent, and well understood statement of an organization’s strategic logic. Their study also suggests how the mathematical rules that govern the iterative generation of fractals in nature can be applied to develop a “mathematics of social systems.” The authors’ analysis of strategy processes in the subject organization shows how the use of storytelling through internal organizational publications can contribute substantially to the emergence of a coherent strategic logic and supporting value system within an organization.

In this paper, we look at how understanding the basic rules governing the iterative mathematical generation of fractals might be translated into understanding a mathematics of social systems. In particular, we will apply the fractal metaphor to illustrate the creation of a coherent strategic orientation in a nonprofit organization. We believe that the use of “stories” in prominent organizational publications is an integral part of the generation of a coherent strategic orientation.

There has been a constant evolution over the past two decades in the banking business portfolio, due to economic globalisation, deregulation, and the advent of new technologies. This trend continues today and is even more marked by the emergence of production businesses which have traditionally been included in the value chain of banking services.

An examination of this phenomenon is made possible by value chain analysis. This concept has been adapted to banking. The notions of organisational competencies and value chain have been linked to detect value-adding activities in the various bank services and identify opportunities for new conditions for value production.

This paper presents an approach for developing critical skills necessary for competition in the future. The study combines the methodology of designing scenarios with the methodology of defining competencies by a transition from future scenarios to skills, based on product scenarios. Product scenarios indicate concrete alternative future products that are key sources for identifying future skills. The approach has been applied to the security equipment sector in Turkey. The product, closed circuit television (CCTV) system is chosen to illustrate the process.

This paper deals with contemporary ways of implementing strategies using the logic of real options. Key objective of the study is to describe and explain how organisations develop and execute the strategies to achieve their objectives. The paper attempts to develop a new view of strategy implementation by utilising the recent advances in the area of real options. Based on empirical observations in manufacturer-retailer networks, the new view does not consider strategy as the ultimate concept of the company’s positioning or direction in the market but as an inventive stream of enacting what is possible for each organisation in its respective network. While organisations react to events as they unfold, implementing strategies takes the form of creating and enacting a number of real options that best reflect the organisations’ competencies and their capacities derived from network membership.

During the 1990s, new theories emerged in the field of strategy. In particular, the resource-based and competence-based views of the firm developed in reaction to Porter and the entire current derived from the industrial economy. However, these approaches have their own limitations: they are difficult to put into practice and are partially similar to the industrial approach.

This article has two aims: (a) to make a clearer distinction between the classical approach on the one hand, and the resource- and competence-based approach on the other hand; and (b) to overcome the opposition between these two models in order to grasp their complementarities. First of all, a critical analysis of the literature is presented, in order to understand how these two approaches fit into thinking. This theoretical framework is then illustrated by a case study of Air Liquide, which, in some of its activities, adopted a competence-based strategy and structure. The case study clearly identifies the points of divergence such as the complementarities between the two approaches, thereby showing how one can overcome their oppositions as well as their respective limitations.

This paper describes a modelling process the objective of which was to make the highly abstract concept of core competence practical. The aim is to identify competences through the use of a service-process model by analyzing what they reflect – the service quality. Core competence is defined, and a conceptual model is presented. Competences are classified on three levels in a corporate setting and the connections drawn to service quality. Empirical evidence is provided by a case in the health-care sector in which competences are identified through the use of the service-process model in high-performance, professional services. The service-process model in surgical medical services is presented. Critical elements in the service-quality experience are identified and core competences are identified based on service quality as a reflection of them and their management.

This paper discusses a number of issues affecting mergers and acquisitions (M&A) from the perspective of competence-based management. A new framework for competence gap analysis is developed which can be used to assess important aspects of M&A decisions. The usefulness of M&A is compared with other gap-closing actions. This model is founded in the systems view of the firm as developed by Sanchez and Heene (1996), where strategic gaps perceived by managers motivate actions to change the resource and competence base of a firm. In the analysis process derived from this model, several resource states must be identified and analyzed, especially those critical to competences that are needed to achieve sustained competitive advantages in targeted future markets. This approach to strategic gap analysis is also helpful in evaluating alternative gap-closing actions. In this context, M&A are shown to be particularly appropriate actions to fill numerous and large competence gaps especially with a high degree of interaction between involved resources.

This paper addresses the accusation that the competence perspective lacks operationalization. By evaluating the resources and competences regarded as important a categorization of capabilities is developed. Four lower-order and three higher-order capabilities are derived inductively by analyzing the firm as an open system. Using this categorization of capabilities five cases of business model transformation are analyzed. The paper also discusses the possibilities to use this categorization for prescriptive and normative purposes and presents some preliminary ideas for further research.

This paper paves the path towards defining a research agenda for competence based strategic management theory. The central question for the research agenda ultimately is: “What elements can cause (and explain) variation in organizational outcomes between firms within an industry in the short run and in the long run?” Potential variables to be linked to variation in (short run and long run) performance are to be found in all aspects of the firm as an open system: cognitive and leadership aspects, variation in competitive positionings within the environment, differences in the domain choice and entrepreneurship, and differences in operational management. All these elements evolve and influence each other systemically in an intertwined double loop system of competence leverage (short term loop) and competence building (long term loop) processes. By performing current activities better and better (short term loop), the competencies involved in those value activities will be leveraged creating the necessary slack to build new competencies in the long term loop which will in turn enable the company to perform better.

Employing the notion of balanced growth postulated by competence-based literature, the present study submits that a firm’s growth strategy can be understood as its ability to manage the interplay of building and leveraging existing competence within the business context. The synergistic effects resulting from the creation of a self-reinforcing cycle of competence building and leveraging initiatives then drive the achievement of superior performance. To examine the validity and usefulness of this conception, we conduct a systematic investigation on the strategy-performance link of contract electronics manufacturers based in Taiwan, who have emerged as the competitive global supply base in electronics and computer industries. Empirical results based on a panel of business-level operating data show that while building product-related competence is essential to the contract manufacturer’s achievement of higher profitability, leveraging competence between subcontracting services and own-brand business will significantly enhance both profitability and sale growth. The implications of formulating a sustainable growth strategy for contract manufacturers in the context of horizontally configured industries, and suggestions for future research endeavors on competence-based management are discussed.

This paper examines competence development as a facet of a firm’s dynamics. Proceeding from a “model of competence building” developed in an earlier study, a theory of competence development is outlined, which recommends that competence development should cyclically alternate between competence upgrading and competence renewal. This cycle is subject to various influences, including the firm-specific resource base, the way in which managers perceive competence to create customer value, the level of undesired knowledge diffusion, and changes in the environmental dynamics specific to the firm. Inevitably, the theory of competence development involves some simplifications; yet it’s relevance is underlined by the fact that it stands up to empirical analysis.

A new grouping of the eight schools of thought on business management is introduced. Their advancement is initially assessed with the help of a frame of reference, which is based on the principles inherent in Beer’s viable system model. It is proposed that a high degree of systemic advancement is one of the necessary attributes of any business-management concept that will be proven to be highly applicable to managing a firm’s dynamic business in practice. The first assessment reveals that the systemic advancement of the representative concepts varies a lot as follows. Porter’s chained frameworks (representing 1st Porterian school), Barney’s VRIO framework (2nd resource-based school), Sanchez and Heene’s concepts (3rd competence-based school), von Krogh et al.’s concept (4th knowledge-based school), and Hedlund’s heterarchy (5th organization-based school) are fairly systemic, respectively. Martin’s cascade (6th process-based school) is less systemic. Instead, Hamel’s revolutionary concept (7th dynamism-based school) and Brown and Eisenhardt’s competing on edge strategy (8th evolutionary school) are highly systemic. Thus, some promising ways to advance, in particular, the competence-based school of thought on business management are suggested.